A Site Selection Web Exclusive,
January 2013

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Trade-Off Tracker

An energy scorecard clarifies electricity generation choices.

by SCOTT CARLBERG

E

nergy comes in many forms. It's not as simple as electricity or gas. It's electricity made from coal, nuclear, solar, biomass, hydro or wind. Vehicle fleets can be powered by electricity, gasoline, diesel or compressed natural gas.

All of these energy forms provide communities and energy producers with options, and for many of these options site selection is the critical link from proposal to production. For residents, businesses, elected officials, utilities and others it becomes necessary to develop a common understanding of various energy sources’ attributes and tradeoffs.

That variety of options can be a challenge. The 2004 book “Paradox of Choice” points out that when we face many options, we often become less satisfied and confident in our decisions. Sometimes a lot is too much. Objective guidance is helpful.

When it comes to considering power generation technologies, a tool is now available that can help sort out electric generation choices. The Electric Power Research Institute (EPRI) in Charlotte, N.C., has published an easy-to-use reference card to help communicate the trade-offs associated with various electricity generation technologies. The reference card compares technologies such as renewables, coal, natural gas, and nuclear in terms of their relative benefit or impact in a number of areas.

“This reference card helps sort out some of the complexities with electricity generation and the range of factors that must be considered in making decisions about new generation technologies,” said Robin Bedilion, EPRI project manager. “The purpose of this effort is to provide all interested audiences with a beginning framework for understanding the scale, economics, environmental impacts and reliability of power generation options.”

The reference card has simple graphics to compare the scale of electricity generation options, the mix of generation technologies in use, and the amount of time a given generation technology typically operates. EPRI uses the City of Chicago as an example, illustrating how many power plants of each type would be required to meet the electricity demand of one million households.

Factors evaluated include the cost to build a power plant, the amount of land required to support the plant’s operation, the plant’s water requirements, air emissions and waste products, and the ability of the technology to generate electricity when needed.

Why do factors such as land use or emissions matter in the bottom-line world of site selection and industry attraction?

“Energy means more than dollars and cents now, even though most people start from an economic point of view,” says Chris Gadomski, Bloomberg New Energy Finance lead analyst, nuclear, who has adapted the well-known SWOT analysis. “I use a STEEP analysis, examining the social, technical, economic, environmental and political world where that energy plant would operate. And in some cases I add a ‘W’ for water, which seems more critical every year.”

Gadomski cites the popularity of new natural gas plants to generate electricity in a STEEP analysis. “These plants have two strong positives — an economic advantage because the cost of plant and the fuel source is modest, and an environmental improvement if they compare to coal. Politically, gas generation is accepted and there are no major social issues.”

Soft Issues, Changing Circumstances

Hard dollars have to balance soft issues, too, like perception (the social and political side of STEEP).

“Site selection and acceptance goes past empirical economic data,” says David L. Shank, APR, president of Indianapolis-headquartered Shank Public Relations Counselors, Inc. Shank has been involved in the site selection and approval processes for mini-steel mills, electric generating plants and major retailers. “What may seem like the perfect site on a PERT [program evaluation and review technique] chart or spreadsheet may be a disaster if emotions are ignored.”

Shank says the community and the fence-line neighbors may mount opposition to the point that even the most logical economic arguments are ignored. “Scare tactics by opponents, the company’s past reputation and experience, and fear of the unknown can derail a project or drag out the decision-making process.”

Developers must recognize the emotional issues before the constituency will begin to hear the positives. Likewise, the developer must be flexible and demonstrate a willingness to address fears. Says Shank, “In one case, fear of air pollution at a nearby elementary school prompted a Midwest company to voluntarily install air pollution monitors at the school. The promise was that if there was a transmitted pollution problem the company would remedy it immediately.” After the plant was built and with prolonged monitoring it was proven there were no adverse pollution issues at the school. The monitors were removed and the trust and credibility in the company was maintained.

Any analysis is accurate for a point in time. Conditions can change.

“Germany decided in the wake of Fukushima to close its nuclear assets, preferring to deploy renewable energy technologies and rely on energy efficiency to reduce electricity demand,” says Gadomski of the Merkel administration’s decision to shut down nuclear power plants after previously having committed to extending their operational life. “Driving the decision were the perceived social and political benefits for constituents and politicians. The decision, however, has negative economic and environmental consequences as the cost of electricity to consumers has climbed, as have CO2 emissions in the near term following an increase in fossil fuel consumption to offset the idled nuclear assets.”

Other factors may need to be considered, too.

While natural gas is cheap today, it may not be in the future. Since 1997, the price (US$/MMBtu) has been under $2 and over $18. A low-cost-to-build gas plant has fuel as its major cost of operation. On the other hand, nuclear plants have the lowest cost of fuel over the life of a plant, and their fuel is the lowest percent of operational cost for energy generation.

Some regions may consider a plant's O&M costs as an economic development driver. Alternative energy sources or gas plants can use minimal employees, and in some cases, no full-time people. Large plants have ongoing payrolls and supply chains. Is the multiplier effect a factor in any local decision?

Each region has its unique spot on the STEEP grid when it makes energy decisions. The EPRI reference card and the STEEP analysis are a useful duo for a quick look at energy options. The EPRI reference card is one credible source for electric generation information that site selectors, government officials and industry professionals can all use.

Scott Carlberg is president of E4 Carolinas, devoted to Energy, Economy, Environment and Efficiency. The organization is based in Charlotte and works across the Carolinas to develop the industry and aid economic development.

The Site Selection Energy Report features exclusive and in-depth reporting and analysis on the most important energy projects and energy policy issues impacting the world of manufacturing and industrial real estate. Topics covered include oil and gas projects, investments into alternative energy installations and R&D, tax credits and financing, electric utility issues and much more.